Simple text version follows

United Nations A/61/264 (Part II)
General Assembly Distr.: General
23 February 2007
Original: English
Sixty-first session
Agenda items 127 and 132
Report on the activities of the Office of Internal
Oversight Services
Administrative and budgetary aspects of the financing of the
United Nations peacekeeping operations
Report of the Office of Internal Oversight Services
Part two:* peacekeeping operations
Summary
The present report is submitted in conformity with General Assembly
resolution 48/218 B of 29 July 1994 (para. 5 (e)), resolution 54/244 of 23 December
1999 (paras. 4-5) and resolution 59/272 of 23 December 2004 (paras. 1-3). It covers
peacekeeping oversight activities of the Office of Internal Oversight Services during
the 18-month period from 1 July 2005 to 30 December 2006.
The Office of Internal Oversight Services issued more than 170 oversight
reports related to peacekeeping, which accounted for over 50 per cent of all
recommendations put forward during the period. In many of the reports the Office
noted a breakdown in one or several components of internal control or a total
disregard for controls. Programme managers have accepted the majority of the
recommendations and have initiated action to rectify the weaknesses.
While inspection and evaluation resources dedicated to peacekeeping remained
flat during the present reporting period, there was an increase in resources for both
audit and investigations, which enabled the Office of Internal Oversight Services to
perform additional oversight work. The establishment of the Procurement Task Force
in January 2006 further helped to identify significant waste, abuse, negligence and
other forms of mismanagement, as well as fraud, in the establishment and execution
of a number of high-value contracts between the Organization and various vendors
who provided goods and services to United Nations peacekeeping missions.
* Part one of the report and addenda (A/61/264 (Part I) and Add.1; and Add.2) were issued on
15 August and 29 September 2006 respectively.
07-24903 (E) 200307
*0724903*
-----------------------------------------------------------------------------------------
A/61/264 (Part II)
Highlights of the report include the following:
Integrity violations. The Office of Internal Oversight Services investigated a
broad range of integrity violations in peacekeeping operations. In two separate cases,
the Office substantiated allegations that military contingent members had sexually
abused under-age girls. Office of Internal Oversight Services investigations during
the period also substantiated evidence of gross negligence, corruption and serious
mismanagement at some peacekeeping missions.
Procurement. Audits and investigations identified serious deficiencies in
procurement management, systems and process in peacekeeping operations,
including serious weaknesses in internal controls and inadequate managerial
accountability. The Procurement Task Force issued 11 reports detailing significant
findings of waste, abuse, negligence and other forms of mismanagement, as well as
fraud.
2 07-24903
-----------------------------------------------------------------------------------------
A/61/264 (Part II)
Preface
I am pleased to submit to the General Assembly the first Office of Internal
Oversight Services annual report dedicated to peacekeeping activities. The report
covers the period from 1 July 2005 to 31 December 2006 and sets out the Office of
Internal Oversight Services' major findings in peacekeeping operations during the
period.
A report dedicated to United Nations peacekeeping operations is required
given the size and magnitude of those operations and the extent of the Office's
involvement in the oversight of the Department of Peacekeeping Operations.
Looking back over the past 18 months and the more than 170 reports that the
Office of Internal Oversight Services issued on peacekeeping activities, one
management shortcoming appears noticeable, namely the absence of a robust
internal control framework that sets out management's responsibility for, among
other things, the control environment, risk assessment and control activities. As
highlighted in the present report, there have been multiple instances in which a
breakdown of the internal control system has exposed the Organization to
unnecessary risk and, in some cases, has facilitated the mismanagement and misuse
of resources.
Adverse working conditions or difficult operational conditions are often cited
as reasons for poor internal controls, reasons that the Office of Internal Oversight
Services cannot accept. The high risks inherent in field environments necessitate
stronger internal controls and even greater scrutiny to help the Organization to guard
against the types of mismanagement and misuse of resources referred to in the
present report.
During the reporting period, considerably more resources were dedicated to
oversight of peacekeeping activities, largely through the support of the Assembly.
This has enabled the Office of Internal Oversight Services to place more staff in the
field, which I feel has contributed to its ability to respond more effectively to
increased oversight requirements. During the period the Office has also made
significant progress towards achieving its goal of a fully risk-based workplan by
2008, which will allow it to better identify the areas of peacekeeping operations that
require greater scrutiny.
I wish to underscore the importance of expeditious implementation of
recommendations to reduce the United Nations' risk of exposure to losses and
waste. While in many cases programme managers have begun to take corrective
action, peacekeeping operations remain vulnerable until recommendations are fully
implemented.
In conclusion, the Office of Internal Oversight Services feels there is good
progress towards achieving the required coverage for oversight of peacekeeping
operations. I believe that while the management response, as evidenced by the
implementation rate for recommendations, is showing a positive trend, there is still
much room for improvement to further reduce the risk of exposure to losses and
waste. I also wish to reiterate that a fully functioning internal control framework is a
critical component for assurance and accountability, and I look forward to seeing the
implementation of such a framework as soon as possible.
(Signed) Inga-Britt Ahlenius
Under-Secretary-General for Internal Oversight Services
23 February 2007
07-24903 3
-----------------------------------------------------------------------------------------
A/61/264 (Part II)
Contents
Page
Preface . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
I. Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
II. Oversight results by risk area . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
A. Integrity violations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
B. Procurement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
C. Asset management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
D. Human resources management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
E. Programme and project management. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
III. Management consulting activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Annex
Review of methodology for the allocation of resident auditors to peacekeeping missions . . . . 25
4 07-24903
-----------------------------------------------------------------------------------------
A/61/264 (Part II)
I. Introduction
1. During the period 1 July 2005 to 31 December 2006, the Office of Internal
Oversight Services (OIOS) issued over 170 oversight reports related to
peacekeeping operations. The recommendations issued in those reports represent
over 50 per cent of all OIOS recommendations issued during the reporting period.
The present report highlights only the areas OIOS deems of most concern to the
Organization. 1 The annex provides a review of the OIOS methodology for the
allocation of resident auditors to peacekeeping missions, as requested by the
General Assembly in its resolution 60/268.
2. With the rapid surge in peacekeeping operations, 2 the scope of work of the
Office of Internal Oversight Services has increased considerably. Resident auditor
staff in peacekeeping and special missions increased by 45 per cent 3 during the
18-month reporting period. Resident investigators were introduced to the United
Nations Operation in C�te d'Ivoire (UNOCI), the United Nations Mission in the
Sudan (UNMIS), the United Nations Mission in Liberia (UNMIL), the United
Nations Operation in Burundi (ONUB), the United Nations Organization Mission in
the Democratic Republic of the Congo (MONUC) and the United Nations
Stabilization Mission in Haiti (MINUSTAH). In inspections and evaluations, a
review of approach and methodology is under way to ensure comprehensive
coverage of peacekeeping operations. OIOS headquarters staff dedicated to
peacekeeping oversight activities also increased by 32 per cent during the same
period. The figure shows the number of resident auditors and investigators assigned
to peacekeeping and special political missions as of 31 December 2006.
__________________
1 Although a waiver of page limitations requested by OIOS was granted, OIOS is in general
disagreement with those limitations, as they infringe upon the Office's independence in terms of
reporting to the Assembly.
2 The total peacekeeping budget, including the United Nations Logistics Base and the support
account, increased from $2.7 billion in 2001/02 to $5 billion in 2005/06 (A/60/727).
3 The increase occurred between 30 June 2005 and 31 December 2006, including all categories of
staff.
07-24903 5
-----------------------------------------------------------------------------------------
A/61/264 (Part II)
Figure 1
Office of Internal Oversight Services resident oversight staff
(as of 31 December 2006)
12
10
Number of staff
8 Auditors
6 Investigators
4
2
0
UC
L
A
I
I
S
H
E
st
IK
UB
AM
OC
MI
ME
MI
TA
AM
M
Ea
ON
ON
UN
UN
UN
UN
UN
UN
US
UN
le
M
dd
IN
M
Mi
Peacekeeping and special missions
Risk assessment of peacekeeping operations
3. As part of the goal of achieving a fully risk-based workplan by 2008, 4 OIOS,
with the assistance of a consulting firm, conducted a risk assessment of the
Department of Peacekeeping Operations and selected peacekeeping missions
(AP2006/600/14) 5 in early 2006. The endeavour was instrumental is assisting OIOS
to better identify the high-risk areas for review and consequently to ensure that the
findings represented in the present report refer to some of the highest-risk areas that
should be addressed.
Comprehensive audits related to peacekeeping
4. In its resolution 59/296 of 22 June 2005, the General Assembly requested the
Office of Internal Oversight Services to conduct a comprehensive management audit
of the Department of Peacekeeping Operations. OIOS reported its findings to the
Assembly (A/60/717), which were consolidated from the following audit reports:
procurement (AP2006/600/20), financial and budget management (AP2006/600/19),
human resources management (AP2006/600/18), information and communication
technologies (AP2006/600/17), integrated mission planning (AP2006/600/15),
substantive operations (AP2006/600/16) and best practices (AP2006/600/23). In
addition, pursuant to the same resolution, OIOS will provide to the Assembly, for its
consideration at the second part of its sixty-first session, a separate report dealing
with the Department's management structures. Overall, the audit concluded that the
__________________
4 OIOS assignments will be selected and prioritized based on the level of risk they pose to the
Organization.
5 Denotes the symbol assigned to the report submitted to the programme manager.
6 07-24903
-----------------------------------------------------------------------------------------
A/61/264 (Part II)
Department's management structures must ensure that operational and management
processes are fully integrated with a strong internal control framework, and
supported by effective governance and accountability mechanisms. The audit also
pointed out serious weaknesses in internal control and inadequate managerial
accountability for administrative and logistical support functions, as identified in
prior OIOS audits. No systematic risk management mechanism had been developed
as part of an overall internal control framework, and the monitoring of the
Department's subprogrammes by the Office of the Under-Secretary-General,
Department of Peacekeeping Operations, needed major improvement. The Office of
Internal Oversight Services, however, noted that the Department had already made
efforts to improve its management structures. The Department's reform programme,
Peace Operations 2010, launched in 2005, included many initiatives to improve its
management structures in such key areas for change as people, doctrine,
partnerships, resources and organization.
5. Pursuant to General Assembly resolution 60/255, OIOS conducted an audit of
the Department of Political Affairs' ability to manage and direct special political
missions, with a view to ensuring the efficient use of post and non-post resources
(A/61/357). Overall, OIOS found a high risk of duplication and overlap regarding
the functions of the regional divisions of the Department of Political Affairs and the
Office of Operations of the Department of Peacekeeping Operations. 6 During the
period 2007-2009 OIOS will carry out comprehensive audits of all special political
missions. The audits will assess the appropriateness of the internal controls in
budgeting and finance, human resources management, asset management,
programme administration and other areas relating to operations of special political
missions.
Internal control and accountability
6. Peacekeeping activities are subject to difficult operational circumstances and
unforeseen challenges. Such conditions increase the Organization's exposure to risk
and make it crucial for an effective internal control framework and accountability
mechanisms to be in place. OIOS has in several instances pointed out that the
control environment, that is, the tone at the top and commitment to strong controls
and ethics, is the foundation and the most important component of internal control.
Challenging operational realities cannot be used to justify a weak control
environment. Inefficient and weak internal controls expose the Organization to
misuse of funds and even fraud and corruption. In many peacekeeping audits and
investigations conducted over the past 18 months, OIOS noted a breakdown in some
components of internal control, including, in the worst cases, a total disregard for
controls on the part of some senior managers. An internal control framework
emphasizing accountability and ethical behaviour in conformity with the Charter of
the United Nations, which requires that staff members act in the best interests of the
Organization, are the best guarantee for effective and efficient use of resources.
7. The audit and investigation reports issued during the period highlighted
serious weaknesses in internal control, waste, abuse, negligence and other forms of
mismanagement, as well as fraud. While in some cases administrative and
disciplinary action has been swift, in the opinion of the Office of Internal Oversight
__________________
6 Since January 2005, the Department of Peacekeeping Operations has been providing
administrative and logistical support to special political missions.
07-24903 7
-----------------------------------------------------------------------------------------
A/61/264 (Part II)
Services, programme managers have not been consistent in applying the standards to
which they hold staff accountable. OIOS is very concerned that following the
issuance of the Procurement Task Force reports in September and October 2006,
management action has not been taken in the case of four individuals against whom
there were adverse findings (two of whom were part of the eight staff members
placed on special leave with full pay in 2006). OIOS stresses that prompt action is
required to ensure that the implicated individuals are held fully accountable and that
the Organization is fully committed to root out mismanagement and corruption.
OIOS is also very concerned that the Organization lacks effective policies and
procedures to discourage vendors from participating in fraudulent activities and
encourage them to cooperate with OIOS investigations. The existing vendor
suspension and removal process is weak and unfocused and exposes the
Organization to conflicts of interest since the United Nations Procurement Service
manages the process. The Procurement Task Force has reported instances in which
vendors have committed acts of fraud or impropriety in several peacekeeping
missions, but information about the misconduct has not been shared between
missions. More specifically, the Task Force has identified some vendors that acted
improperly in one mission and that thereafter engaged in the same misconduct in
other missions. Communication between missions and between missions and the
Procurement Service has been lacking. Further, there have been instances in which
the Task Force has found vendors to have engaged in misconduct and/or unlawful
activity and thereafter to have gained further business with the Organization, both
directly and indirectly. For example, there have been circumstances in which a
vendor that has committed fraud against the Organization has later gained business
with the Organization as a subcontractor for a separate vendor who had been
awarded the contract by the Procurement Service after a competitive bidding
exercise. In such instances, the selected vendor simply assigned the contract to the
prohibited vendor, and the prohibited vendor performed under the contract as if it
was originally awarded the contract in the first instance. Such weaknesses, shown in
recent highly visible cases, contributed significantly to delays in debarring vendors
who had engaged in corrupt practices, exposing the Organization to further losses of
its assets and negatively affecting its reputation. The debarment of the above-
mentioned vendors resulted primarily from compelling evidence provided by OIOS
and media publicity surrounding the cases, not from a proactive and bold anti-
corruption policy.
II. Oversight results by risk area
A. Integrity violations
8. During the reporting period, OIOS investigated a broad range of integrity
violations in peacekeeping operations, including mismanagement, embezzlement,
and sexual exploitation and abuse. Of particular concern were allegations related to
sexual exploitation and abuse, expressly prohibited in ST/SGB/2004/13, 7 which
__________________
7 ST/SGB/2003/13 defines sexual exploitation as "any actual or attempted abuse of a position of
vulnerability, differential power, or trust, for sexual purposes, including, but not limited to,
profiting monetarily, socially or politically from the sexual exploitation of another". Sexual
abuse is defined as "the actual or threatened physical intrusion of a sexual nature, whether by
force or under unequal or coercive conditions".
8 07-24903
-----------------------------------------------------------------------------------------
A/61/264 (Part II)
represented nearly one third (463) of all allegations received by OIOS during the
period.
9. As of 31 December 2006, 30 of the 463 sexual exploitation and abuse
allegations received by OIOS had been fully investigated and reports issued to the
Department of Peacekeeping Operations. A total of 203 remain under investigative
status. A further 74 cases were referred to the Department for its review and action.
As per the OIOS mandate, in 54 cases where evidence was not found to support the
allegation, the subject of the inquiry was cleared of any wrongdoing. In one case,
the complaint was withdrawn upon the Office's checking with the complainant. The
remaining 101 sexual exploitation and abuse matters were as follows: advisories to
programme managers; insufficient information for investigation; allegations that
were similar to other matters and thereby merged with existing cases; or those that
were overtaken by events, such as a significant time period elapsed between the
alleged act and its reporting, thereby rendering investigation impossible. An
additional three sexual exploitation and abuse investigation reports were issued
during the period, involving allegations from the previous reporting period. Some of
the cases arising from allegations received during the period are described below.
Sexual abuse and exploitation
10. In UNMIL (0706/05), the Office of Internal Oversight Services substantiated
allegations of prima facie evidence that a military contingent member had sexually
abused an under-age girl. OIOS recommended that the Department of Peacekeeping
Operations refer the case to the national authorities of the concerned troop-
contributing country for criminal action against the military contingent. The
Department followed up on the case with the relevant permanent mission to the
United Nations on several occasions; however, to date, an adequate response,
consistent with the evidence of the case, has not been received.
11. In MONUC (0635/05), OIOS substantiated allegations that a military
contingent member had sexually abused an under-age girl, which resulted in the
birth of a child. OIOS has also investigated similar allegations involving another
girl and a member of the same military contingent; however, that allegation could
not be substantiated because the alleged victim could not be located. Both cases
revealed evidence of improper conduct on the part of the contingent Commander of
the respective military contingent members, in that he had provided financial and
subsistence support to the families of the two girls for more than seven months.
Through those actions, OIOS inferred that the Commander hoped to minimize any
complaints made by the family as to the sexual exploitation of the local girls. OIOS
recommended, through the Department of Peacekeeping Operations, that the
concerned troop-contributing country take appropriate action, including action
against the Commander.
12. In UNMIS (0416/05), OIOS substantiated allegations that a staff member
responsible for monitoring the performance of a service contractor had sexually
exploited and abused four women formerly employed by the contractor. Similarly,
OIOS substantiated allegations that the same staff member had harassed other
females employed by the same contractor. All OIOS recommendations in the case
were accepted and implemented by the Department.
13. In UNOCI (0298/05), OIOS found that several staff officers from different
national contingents had brought females, including prostitutes, to a hotel used as
07-24903 9
-----------------------------------------------------------------------------------------
A/61/264 (Part II)
the mission force headquarters, contrary to mission instructions. The investigation
also found that military management had failed to create an environment that
prevented military personnel from engaging in conduct that was, or could be,
reasonably construed as sexual exploitation and abuse. Contributing to the lax
control environment were ambiguous command memoranda and serious deficiencies
in security controls that allowed non-United Nations female personnel entry to the
force headquarters, presenting a significant security risk to United Nations
personnel and assets. The Department implemented all OIOS recommendations in
the case.
14. OIOS believes that curbing the instances of sexual exploitation and abuse by
United Nations peacekeeping personnel requires a collaborative effort by all
stakeholders. Individual troop-contributing countries must ensure that all personnel
are fully aware of their responsibilities towards host country nationals. OIOS also
believes that the United Nations family must make a greater effort to address the
dire economic and social conditions in which vulnerable persons live in areas where
many of the peacekeeping missions are located. The OIOS recommendation in this
case was accepted and implemented by the Department.
15. The Internal Audit Division of the Office of Internal Oversight Services also
reviewed the state of discipline in a global audit of field missions led by the
Department of Peacekeeping Operations to obtain an understanding of the
environment in which gross violations of United Nations standards of conduct
occurred and to assist senior management in the Department in determining a course
of action to strengthen the Organization's standards of conduct and ensure full
compliance (see A/60/713). OIOS acknowledges that the Department and the Office
of Human Resources Management of the Department of Management have already
implemented a number of OIOS recommendations resulting from that review. For
example, the Department of Peacekeeping Operations established conduct and
discipline teams at Headquarters and in 12 field missions. The teams' mandate
covers the oversight of conduct and discipline matters in peacekeeping to ensure
compliance with United Nations standards of conduct by all peacekeeping
personnel. The teams are an important tool to ensure that mission management is
informed of relevant developments in the Mission on conduct and discipline
matters. In addition the teams provide policy guidance and technical advice in the
creation and implementation of training to strengthen the capacity of missions to
address misconduct, in particular sexual exploitation and abuse.
16. The Department of Peacekeeping Operations, the Office of Human Resources
Management and the OIOS Investigations Division are developing various training
programmes, including modules on the code of conduct, on the prevention of sexual
exploitation and abuse and on investigative techniques. To date, training modules 2
and 3 of a mandatory training programme on the prevention of sexual exploitation
and abuse, aimed at mid-level managers and military commanders, have been
completed. The modules are being reviewed by conduct and discipline teams and the
Integrated Training Service of the Department of Peacekeeping Operations prior to
their finalization by 30 March 2007.
17. OIOS will continue to undertake investigations into the misconduct, in
particular in cases of sexual exploitation and abuse, reported in peacekeeping
missions and will offer recommendations for sanctions and policy changes where
practical. However, it is vital that all stakeholders address their own accountability
10 07-24903
-----------------------------------------------------------------------------------------
A/61/264 (Part II)
in this area to ensure behavioural change and a reduction in the abuse of vulnerable
persons.
Mismanagement
18. In the United Nations Office in Timor-Leste (UNOTIL) (ID 645/05), OIOS
conducted an investigation into allegations of serious mismanagement of the assets
stored in the communication and information technology warehouse in Dili. The
evidence adduced by the investigation confirmed gross negligence and serious
mismanagement on the part of the communication and information technology
service asset manager and highlighted the lack of supervision and oversight by the
service's line managers, leading to a loss of United Nations property with a total
value of some $249,000. OIOS recommendations to the Department, including
seeking reimbursement from the managers concerned and taking appropriate action
against responsible mission staff, are in various stages of implementation.
19. In another investigation into mismanagement, the United Nations Interim
Force in Lebanon (UNIFIL) (ID 261/05) OIOS found that senior officers of the
contingent of one troop-contributing country, including the Commanding Officer,
had put into place a system whereby they fraudulently overstated their fuel
requirements by making false statements about their travel activity and forging data
about fuel consumption by generators. The senior officers then sold the excess fuel
thus generated to local buyers. They also sold United Nations rations to local shops
and supermarkets, using local and contingent interpreters as middlemen. In a
separate finding, documents obtained by OIOS showed that the same battalion used
only twenty per cent of their serviceable vehicles, though the United Nations
reimbursed the Government of the troop-contributing country for maintaining the
entire fleet of vehicles in a serviceable condition, thus inflating the reimbursement
by the United Nations to five times the amount that was actually necessary. The
investigation concluded that the estimated loss incurred by the United Nations as a
result of the above illegal activities was $1.5 million. Evidence was also obtained to
support findings that one military officer of the same battalion had violated the
national law of his country by taking bribes in his official capacity as a member of
the selection panel in assigning posts to troops wishing to join the contingent. OIOS
recommended that the Department ensure that the troop-contributing country take
appropriate action against the officers concerned. Furthermore, OIOS recommended
that the Department ensure that the officers concerned not be assigned to
peacekeeping missions in the future and that appropriate action be taken against the
contingent interpreters. The Department has implemented the majority of the OIOS
recommendations issued in the case and, in particular, has repatriated the entire
contingent from the Mission and has sought follow-up action against the senior
officers from the concerned troop-contributing country.
20. Fuel management is a major risk area for the Organization, and pursuant to
General Assembly resolution 60/259, OIOS conducted an audit of fuel management
in 10 field missions. 8 The results of the audit will be summarized in a separate
report to the General Assembly in the second part of the resumed sixty-first session.
__________________
8 The 10 field missions were MINUSTAH, MONUC, ONUB, the United Nations Assistance
Mission in Afghanistan (UNAMA), the United Nations Assistance Mission for Iraq (UNAMI),
the United Nations Mission in Ethiopia and Eritrea (UNMEE), UNMIK, UNMIL, UNMIS and
UNOCI.
07-24903 11
-----------------------------------------------------------------------------------------
A/61/264 (Part II)
Investigations Task Force at the United Nations Interim Administration
in Kosovo
21. The Investigations Task Force, a tripartite group comprised of OIOS, the
European Anti-fraud Office (OLAF) and the Financial Investigations Unit of the
United Nations Interim Administration Mission in Kosovo (UNMIK), is mandated
to conduct investigations of publicly owned enterprises in Kosovo (Serbia). During
the reporting period, task force investigations focused on fraud and corruption in the
energy sector in Kosovo. Specifically, 13 fraud and corruption matters were
identified at the Kosovo Electricity Company (KEK) for investigation. Three of
those cases (see below) were provided to the Special Representative of the
Secretary-General for his approval of the referral and for onward transmittal to the
UNMIK Department of Justice for criminal investigation. Another case was referred
to the European Union (EU) as it involved a staff member of the EU. Nine cases are
under investigation. UNMIK has confirmed that the Special Representative
approved and transmitted the three Investigations Task Force cases on KEK to the
UNMIK Department of Justice for judicial action in December 2006.
22. The three cases referred to the Special Representative are as follows:
� Approximately $5.5 million of UNMIK and EU funds for the purchase of
electricity from abroad were diverted to other bank accounts controlled by
third parties.
� Unexplained transactions of more than $1.3 million (one million Euros) were
identified in the account of a KEK employee with a regular monthly salary of
less than one thousand dollars.
� Conditions exceedingly unfavourable to KEK in an agreement relating to the
refurbishment of a hydropower station and the buy-back of energy between
KEK and a Member State company were identified.
B. Procurement
23. Audits and investigations of procurement have identified serious deficiencies
in procurement management, systems and processes. As a consequence of the report
of the Independent Inquiry Committee on the oil-for-food programme and of the
arrest and conviction of a United Nations procurement officer, a task force was
established (see A/61/264 (Part I), para. 55) to investigate wrongdoing in all
procurement matters wherever the Organization is engaged. Unless procurement
recommendations are addressed with paramount concern, millions of dollars remain
at high risk of misuse and waste.
24. Several of the cases mentioned in the present section are still under
consideration by the Office of Human Resources Management. Where applicable,
OIOS has made a special note of those cases. The staff members concerned should
not be judged responsible until the matter has been fully adjudicated within the
Organization's system of justice.
Procurement Task Force
25. Since June 2006, the Procurement Task Force has issued 11 reports. The
reports detail significant findings of waste, abuse, negligence and other forms of
12 07-24903
-----------------------------------------------------------------------------------------
A/61/264 (Part II)
mismanagement, as well as of fraud, in the establishment and execution of a number
of high-value contracts between the Organization and various vendors to provide
goods and services to United Nations peacekeeping missions. The contracts directly
involved the following missions: the United Nations Mission in Ethiopia and Eritrea
(UNMEE), UNMIS, UNMIL, MONUC, the United Nations Transitional
Administration in East Timor (UNTAET), MINUSTAH and others. The Task Force
has identified significant waste and/or fraud caused by the action of vendors and
their agents and representatives, negligence, abuse and other forms of
mismanagement, as well as some acts of fraud by certain officials within the
Organization.
26. The Task Force initially focused its resources on investigating eight staff
members placed on special leave with full pay in January 2006. The Task Force has
issued nine reports pertaining to the eight staff members. Four of them served in
peacekeeping missions; the others held responsibilities that included procuring
goods and services for peacekeeping missions. The Task Force has recommended
that three of the eight staff members be cleared of claims of wrongdoing, that one be
referred for criminal prosecution and that the Organization address the issue of
accountability for the other four for breaches of rules, and/or other forms of
mismanagement. The staff member whose case was referred for criminal
prosecution has since been dismissed by the Organization. The status of the four
remaining staff members is still under consideration at the time of the present
report.
27. The significant cases investigated by the Task Force are described below.
28. The Task Force continues to focus on a matter identified in the OIOS audit
concerning the procurement of an air services contract for UNTAET in 2000
(PTF 6/06). The Task Force identified the existence of a scheme in which
individuals presenting themselves as representatives of the vendor steered the
contract to individuals who proceeded to overcharge the Organization for various
services and to bill the Organization for services in fact not rendered. Considerable
effort by the Task Force was exercised in this matter, which resulted in the
identification of a sophisticated scheme to divert monies paid by the Organization
by a circuitous route through various financial institutions throughout the world.
The Task Force has identified false and fraudulent documents submitted to the
Organization to justify the overpayment of at least $1.4 million in connection with
the air services contract. It also found that two senior officials of the United Nations
failed to exercise proper scrutiny of the transaction. Officials of the Member State
concerned have indicted four individuals in the scheme. The Task Force has been
unable to conclude the matter owing to the absence of the power to compel Member
States to assist in the investigation.
29. Following another investigation, the Task Force issued a report dated 27 July
2006 (PTF 26/06) pertaining to one of the eight staff members mentioned above,
which identified an extensive scheme by agents and representatives of a large
telecommunications firm to defraud the Organization. The scheme was established
by the company and its agents, and with the assistance of a United Nations
Procurement Officer. The Task Force investigation found that the Procurement
Officer had engaged in a series of unauthorized acts in an effort to provide the
company with an advantage in the procurement exercises and deflect criticism of the
company when allegations of corruption and mismanagement surfaced. The Task
07-24903 13
-----------------------------------------------------------------------------------------
A/61/264 (Part II)
Force found that the Procurement Officer had favoured this company in a number of
contracts with an aggregate value in excess of $100 million, including a $27 million
contract to provide manpower support in the Organization's various missions.
Further, the Task Force determined that representatives of the company repaid the
Procurement Officer for his preferential treatment by providing him with two
valuable pieces of Manhattan real estate worth in excess of $1.5 million at a price
below market rate, and by bestowing other gifts upon him.
30. In response, the Organization charged the procurement official with
misconduct and subsequently dismissed him. Several vendors identified by the Task
Force that had engaged in misconduct and fraud were removed from the vendor
roster. The Organization also referred the matter to the United States Attorney's
Office for the Southern District of New York, which has charged the Procurement
Officer with criminal offences. The prosecution was based principally on evidence
and information gathered and reported by the Task Force. The vendor's principal
agent pleaded guilty to the conspiracy identified by the Task Force, and was
subsequently charged by the United States Attorney's Office for the Southern
District of New York. The agent acknowledged in open court that he had provided
the procurement official with the valuable real estate at a price below market rate in
return for favourable treatment of the company by the Procurement Officer in the
contract-bidding process.
31. The Task Force also reported in December 2006 (PTF 7/06) on significant
corruption in the procurement of food rations for UNMIL and UNMEE, and found
that the procurement exercises for those contracts were tainted by a well-planned
scheme to steer the contract towards a particular vendor. The Task Force reported
that a United Nations staff member helped the representative of the vendor and
several of its officials to corrupt the procurement process through the replacement of
bid pages of the company's proposal after the deadline and actual submission of the
bids. The Task Force concluded that a procurement official provided the company
with financial information from competing bids after the bids were submitted and
closed, and that he allowed the company to lower its projected costs to win the
contract bid. Once that bid was achieved, the procurement official permitted the
company to amend the contract to reap additional sums of money unnecessarily and
improperly.
32. The Task Force found that the above-mentioned criminal scheme was
facilitated by the failure of a senior official and two other staff members in
supervisory positions to exercise due care and specifically, to scrutinize contractual
documents properly. The Task Force has recommended that appropriate action be
taken by the Organization.
33. The Organization has since paid the company in excess of $130 million under
the contracts, of which approximately $860,000 could be determined by the Task
Force at present as financial losses. The Task Force has recommended that the
Organization make a referral to prosecuting authorities in the United States of
America, the United Kingdom of Great Britain and Northern Ireland and Italy and
consider seeking civil damages. In an initial response, the Organization has
suspended two companies from the vendor register.
34. In addition, the Task Force has focused a great deal of attention on several
cases involving allegations of procurement irregularities in UNMIS (PTF 18/06,
29/06, 20/06). The Task Force has reviewed several procurement exercises and
14 07-24903
-----------------------------------------------------------------------------------------
A/61/264 (Part II)
found violations of procurement and financial rules by the Mission's staff, including
the Mission's senior management, in the following instances: (a) the improper use
of a contract to purchase fuel for a troop deployment, resulting in the Organization
incurring an obligation of $1.3 million; (b) the purchase of a system of solar runway
lights for a local airport; (c) another matter in which a scheme existed between an
aviation officer, a procurement official and the Chief Executive Officer of a vendor
to steer the solar runway lights contract (and other contracts) to the vendor; and
(d) the purchase of other items for the Mission in breach of financial and
procurement rules. The Task Force identified breaches of United Nations
Regulations and Rules and/or other forms of mismanagement by four staff members,
two of whom engaged in criminal acts and who have since left the Mission. Referral
of these two former Mission staff members matter to prosecutorial authorities was
recommended. The Task Force also identified significant waste of United Nations
resources in the Mission. A later OIOS audit issued in October 2006 revealed
several cases of mismanagement and waste, as well as fraud indicators to be further
investigated by the Task Force (see paras. 33-38).
35. In response, the Organization has removed two vendors from the vendor
register. The Organization continues to contemplate what action, if any, it will take
against two senior staff members in the Mission who exercised supervisory roles in
several of the matters in which failings were identified.
Procurement audits
36. In addition to UNMIS procurement irregularities brought to light by the
Procurement Task Force, OIOS audits conducted during the period have identified
serious weaknesses in UNMIS procurement management.
37. An audit of procurement management in UNMIS (AP2006/632/08) revealed
serious control weaknesses and identified a number of potential fraud indicators as
well as cases of mismanagement, wasteful expenditures, overpayments to vendors
and questionable procurement practices. For example, the Mission followed the
practice of soliciting bids from a short list of vendors, but the criteria for short-
listing were often not transparent. Potential bidders were not given sufficient time to
submit their bids, and the timelines for the submission of bids and proposals as
indicated in the Procurement Manual were not being observed. Those practices
restricted the competition and increased the costs to the Mission. For example, a
$17 million contract for the supply of gravel was awarded on a "sole bid" basis at
what appeared to be exorbitant prices.
38. The Mission incurred an estimated $1.2 million in unnecessary expenditures
for hotel accommodations as a result of making block bookings of hotel rooms for
military personnel and underutilizing them. Those expenditures could have been
avoided or significantly reduced if the Mission had included an appropriate clause in
the contract to allow UNMIS to cancel the booking for unwanted rooms by giving
adequate prior notice.
39. The audit found that the Mission could enjoy cost savings of an estimated
$9 million over a two-year period by obtaining a licence from the host Government
for self-clearance of imported goods with the local customs authorities. However, to
date, UNMIS has been unsuccessful in obtaining that clearance from the
Government of the Sudan. In addition, control weaknesses in the administration of
07-24903 15
-----------------------------------------------------------------------------------------
A/61/264 (Part II)
contracts for inland transportation need to be addressed to avoid losses to the
Mission through the use of uneconomical contractors.
40. Other cases of waste found by the audit included the unnecessary expenditure
of $50,000 for the purchase of inferior or obsolete digital cameras, payment of
$50,000 towards goods destroyed in transit while they were under the vendor's
responsibility and the unnecessary expenditure of $57,000 for the lease of a
warehouse that was never used.
41. The audit also identified a number of potential fraud indicators and cases of
mismanagement and waste that required further examination through an in-depth
inquiry to determine if fraud had occurred and to assign accountability for
irregularities, waste and mismanagement. UNMIS accepted most of the OIOS
recommendations and indicated that procurement planning had considerably
improved and that controls had been strengthened to ensure compliance with
established procurement procedures. UNMIS took immediate action to recover
overpayments amounting to $315,000, based on the audit findings, from the
concerned contractors. OIOS awaits further information from the Mission, the
Department of Management and the Department of Peacekeeping Operations on the
steps taken to address accountability for the irregularities, waste and
mismanagement identified by the audit.
42. Following a horizontal audit of the management of rations contracts conducted
in five peacekeeping missions, 9 (see A/60/346 and Corr.1), the Office of Internal
Oversight Services conducted a subsequent audit of rations management at UNMIS
(AP2005/632/04). OIOS found that the Mission had been receiving rations supplies
from a vendor since May 2005, based on a letter of award for a proposed
$201 million contract, even though a formal contract had not been signed at the time
the audit ended in December 2005. In the opinion of OIOS, the absence of a formal
contract exposed the Organization to significant risks of possible disputes and
disagreements, with the resultant financial implications.
43. The audit also identified a number of issues that required follow-up by the
Department of Management at the Headquarters level and by UNMIS at the Mission
level. They include the following:
� An incorrect projection of the cost of water to be supplied under the rations
contract was issued. More specifically, the Procurement Service's presentation
to the Headquarters Committee on Contracts understated the commitment
arising from the proposed rations contract by $17 million.
� UNMIS had agreed to allow a contractor to use UNMIS aircraft to deliver
rations to the Mission. In turn, the contractor would charge the Mission a
lower rate for the cost of the rations. However, the OIOS audit showed that the
cost of the flights which took place between September and October when
there were fuel shortages in Sudan, was greater than the revised cost of the
rations by $297,000.
� The delay of four months in testing and certifying the suitability of water
produced by a contingent's water purification plant resulted in avoidable
expenditures amounting to $963,000 paid to a contractor. The Department of
__________________
9 MONUC, the United Nations Mission in Sierra Leone (UNAMSIL), UNMEE, UNMIL, the
United Nations Mission of Support in East Timor (UNMISET).
16 07-24903
-----------------------------------------------------------------------------------------
A/61/264 (Part II)
Peacekeeping Operations commented that an UNMIS inquiry into this matter
concluded that the troop-contributing country should reimburse the cost
incurred by the Mission.
� The Mission paid $839,000 to the vendor for warehouse operations even
though the warehouses were neither complete nor operational.
� Poor storage of composite rations packs obtained from UNMEE and the
United Nations Logistics Base (UNLB) resulted in a loss of $105,000.
Overpayments of $34,000 were also made to the supplier owing to
computation errors.
44. UNMIS accepted most of the OIOS recommendations and initiated action to
implement them. However, a number of critical recommendations were not accepted
by the Mission and by the Department of Management. OIOS has reiterated those
recommendations and continues to pursue them.
45. The OIOS audit of procurement in MINUSTAH (AP2004/683/02) identified 12
procurement actions involving a total expenditure of $9.1 million, including six
cases for leasing premises to accommodate troops, office space and warehouse
facilities at a cost of $6.35 million, that were not carried out in accordance with
established procurement procedures. Requisitioning officers performed purchasing
activities without involving the MINUSTAH Procurement Section, in breach of the
delegation of authority for procurement which is based on the segregation of
requisitioning and purchasing functions. The preceding cases were also
characterized by the lack of competitive bidding, which increased the risk of
uneconomical purchases and fraudulent activities. MINUSTAH subsequently took a
number of steps to strengthen internal controls and ensure that procurement actions
were undertaken in conformity with the provisions of the Procurement Manual.
46. In UNOCI (AP2005/640/03), the lack of a formal acquisition plan for the
Mission contributed to a number of problems such as ex post facto submission of
procurement actions for review by the Local Committee on Contracts, excessive use
of "immediate operational requirement" requests and direct purchases without
competitive bidding. Contract awards were split with a view to keeping the dollar
amount below the level that would require submission to the Committee, which not
only violated the delegation of procurement authority but also compromised the
Committee's oversight role. Internal controls in the area of contract management
need to be strengthened to ensure that the contract ceiling is not exceeded without
prior authorization. Many of the above problems were attributable to the difficulties
experienced in filling critical posts. UNOCI subsequently initiated remedial
measures to address the weaknesses identified by the audit.
47. An audit of procurement at UNAMI (AP2005/812/01), showed that the
Mission failed to exercise due care while developing solicitation documents and
evaluating the technical and financial proposals, and in dealing with the best and
final offers. OIOS attributed those problems to the lack of qualified procurement
staff in the Mission and to limited support provided by the United Nations
Procurement Service, in this case due to resource constraints. The Mission also
failed to seek the prior clearance of the Assistant Secretary-General for Central
Support Services as the authorized official through the Committee on Contracts
before entering into the contract. In addition, major violations of established
procurement procedures in the procurement of T-wall barriers for the Mission's
07-24903 17
-----------------------------------------------------------------------------------------
A/61/264 (Part II)
premises in Baghdad, involving a $793,000 contract with a vendor whose
credentials were subsequently found to be questionable. OIOS made a number of
recommendations to strengthen the procurement process, which were accepted by
UNAMI and are being implemented.
48. In ONUB (AP2005/648/09), OIOS found that an external consultant had been
assigned the regular functions of a Chief Procurement Officer. That individual had
been representing the Mission on procurement-related matters, supervising staff
members, and signing contracts, in contravention of rule Nos. 105.4 and 105.5 of
the Financial Regulations and Rules of the United Nations as well as of
ST/AI/1999/7 governing the use of individual contractors and consultants. The
Mission subsequently appointed a United Nations staff member as its Chief
Procurement Officer and implemented necessary measures to address the other
problems identified by the audit, such as the following: (a) establishing a vendor
review committee; (b) preparing annual procurement plans; (c) using generic
specifications instead of brand names in requisitions; and (d) strengthening internal
controls to ensure that the use of expedited procurement procedures was restricted to
exigencies.
Compliance with bid-opening procedures
49. OIOS quick-impact audits in 10 field missions (AP2006/683/12,
AP2006/620/16, AP2006/648/12, AP2006/812/07, AP2006/654/04, AP2006/624/11,
AP2006/650/12, AP2006/626/19, AP2006/632/12 and AP2006/640/16) 10 showed a
low level of compliance with the established bid-opening procedures as set out in
the Procurement Manual. Such non-compliance increases the risk of irregularities
and compromises the integrity of the bidding process. Common weaknesses found
among the 10 missions included the following: (a) the lack of an adequately secured
area for the receipt of bids; (b) failure to consistently establish tender opening
committees; (c) the date and time of the receipt of bids were not always retained on
file; and (d) the inconsistent use of the solicitation abstract sheet for recording the
bids. The audits also indicated the need for improved filing systems to enable easy
retrieval of procurement files. All missions covered by the audits have already
started implementing measures to rectify the deficiencies noted in the bid-opening
process.
C. Asset management
50. Asset management is an important support function that enables peacekeeping
activities to be carried out effectively and efficiently. Audits in logistics and
property management issued several recommendations to make improvements in the
use of the Organization's assets.
Strategic deployment stocks
51. The audit of the strategic deployment stocks (AP2004/600/02) in the
Department of Peacekeeping Operations highlighted several programme
weaknesses, including the following:
__________________
10 The 10 field missions were MINUSTAH, MONUC, ONUB, UNAMI, the United Nations
Peacekeeping Force in Cyprus (UNFICYP), UNMEE, UNMIK, UNMIL, UNMIS and UNOCI.
18 07-24903
-----------------------------------------------------------------------------------------
A/61/264 (Part II)
� Policies and procedures for managing strategic deployment stocks were not
updated and adjusted in a timely manner. For example, the accounting
guidelines for the stocks were issued two years after the concept's launch,
resulting in the incomplete recording of transactions and an additional
workload for maintaining, updating and reconciling the records of the stocks.
� Galileo, a $3.4 million automated inventory system, did not track the
deployment, replenishment and reconfiguration of the strategic deployment
stocks and was not integrated with the accounting and procurement systems.
The Department noted that the Galileo system tracked the movements and
physical status of the stocks and that an interim tracking tool had been
developed to monitor their replenishment. Based on the experience gained
with that tool, user requirements had been drawn up and presented to the
Galileo Development Group to assist in developing a new Galileo module to
centrally monitor and account for strategic deployment stocks.
� Neither performance indicators nor evaluation tools were developed to
measure the effectiveness of the deployment of strategic deployment stocks.
The Department accepted the OIOS recommendations and initiated action to
implement them.
Property management
52. An audit of property management at the United Nations Peacekeeping Force in
Cyprus (UNFICYP) (AP2006/645/01) found that the Mission needed to strengthen
the existing systems and procedures to ensure accountability for assets and the
reliability of data in Galileo. In the absence of an established mechanism to
coordinate the accounting of assets held at various user locations, there were
discrepancies between asset records and the results of annual physical verifications.
Furthermore, the disposal module of the Galileo system had not yet been
implemented, and the field assets control system (which was a precursor to Galileo)
was being used for processing asset disposals. UNFICYP indicated that the
deficiencies in Galileo were being addressed in consultation with the Department of
Peacekeeping Operations and the United Nations Logistics Base in Brindisi.
According to the Department, the Galileo write-off disposal module was
subsequently implemented in UNFICYP, in November 2006.
D. Human resources management
53. The Office of Internal Oversight Services considers human resources
management to be an important area as it directly affects the lives and interests of
staff members. Past oversight activities have identified a number of risks in this
area. For example, staff rules and regulations can be subject to misinterpretation;
staff entitlements have proved vulnerable to fraud; and recruitment practices have,
in a number of cases, been deemed by OIOS to be biased and even mismanaged. The
Department of Peacekeeping Operations stated that it shared the views of OIOS
regarding the importance of and the risks inherent in human resources management.
To help mitigate those risks, the Department has taken such steps as introducing a
section for quality assurance and information management.
07-24903 19
-----------------------------------------------------------------------------------------
A/61/264 (Part II)
Mission appointments through the Department of Peacekeeping Operations
Succession Planning Panel
54. The audit of mission appointments (AP2006/600/09) found that the Succession
Planning Panel, which was established by the Department of Peacekeeping
Operations in 2004 to review the skills, competencies and experience of each
candidate for key administrative positions in field missions, could be used as an
effective mechanism for the technical clearance of senior mission support staff
appointments. However, the Panel does not appear to be as effective as it could be.
For example, documentation has been insufficient, and the Panel recommended only
one candidate for mission selection in 84 of the 104 cases processed in 2004 and
2005. According to the Department, its ability to present more than one candidate
for senior support positions was severely hampered by the lack of qualified and
experienced expert staff within the Organization to fill such positions. The
Department of Management and the Department of Peacekeeping Operations have
not ensured the consistency, timeliness and adequate documentation of the required
designation of staff with significant fiduciary responsibilities for new posts. The
Department of Peacekeeping Operations indicated that the lack of documentation
does not signify the presence of bias or mismanagement in the selection of
candidates. Nevertheless, both departments are in the process of implementing
OIOS recommendations related to the Succession Planning Panel.
Mission subsistence allowance rates
55. Pursuant to General Assembly resolution 59/296, which requested the
Secretary-General to ensure that OIOS continues to audit mission subsistence
allowance rates to ensure their reasonableness in comparison with the actual
subsistence costs in the various mission areas and with the daily subsistence
allowance set by the International Civil Service Commission in the same areas,
OIOS conducted an audit of mission subsistence allowance rates (AP2006/600/10).
The audit found that there was no clear policy or set of procedures identifying
Department of Management and Department of Peacekeeping Operations
responsibilities or mechanisms for monitoring the mission subsistence allowance
process. In the opinion of OIOS, the Department of Peacekeeping Operations should
be responsible for monitoring the use of established mission subsistence allowance
rates to ensure compliance with applicable policies and procedures, as it provides
the administrative support to all peacekeeping and special political missions. The
Department of Management and the Department of Peacekeeping Operations
accepted all recommendations.
Recruitment of field staff
56. OIOS audits of vacancy rates in MONUC, ONUB and UNMIL found that
delays in the recruitment of international staff were mainly attributable to the time
taken by the Department of Peacekeeping Operations' Personnel Management and
Support Service to identify suitable candidates and deploy them to missions. In
MONUC, for example (AP2005/620/04), the vacancy rate of international staff was
consistently above 30 per cent, and the average time taken for filling a vacancy was
approximately 200 days. In ONUB (AP2005/648/10), six critical posts (including
the posts of Chief Security Officer, Chief Public Information Officer and Chief
Procurement Officer) had remained vacant since the Mission's inception in 2004
20 07-24903
-----------------------------------------------------------------------------------------
A/61/264 (Part II)
and had not yet been filled as of June 2005. The Mission also had difficulties in
filling the posts of national professional officers.
57. In UNMIL (AP2005/626/08), there were considerable delays at the Mission
level in acting upon the shortlists of candidates received from the Personnel
Management and Support Service, and requests for filling 10 critical vacancies were
initiated by the Mission only in January 2005 even though the Mission was
established in September 2003. In the absence of documentation concerning the
comparative analysis of the candidates' qualifications, there was insufficient
evidence of transparency and objectivity in the selection decisions made by
programme managers. The Mission agreed to implement appropriate remedial
measures. The Department of Peacekeeping Operations also commented that it had
undertaken a number of initiatives to better manage the recruitment and staffing
processes.
Casual daily workers
58. Casual daily workers in MONUC (AP2005/620/18) assisted the Mission in
meeting their operational requirements for unskilled and semi-skilled labour on a
regular basis. However, the employment of casual daily workers for prolonged
periods violated the applicable local labour laws as well as United Nations
guidelines. The Mission is in the process of reviewing a number of options for
outsourcing labour services and minimizing the use of casual daily workers.
E. Programme and project management
59. In recent years the range of peacekeeping activities has expanded from
military operations to other substantive areas, including civil and political affairs,
rule of law, human rights and humanitarian activities. Inspections and audits in
programme and project management highlighted areas to help programme managers
to plan and deliver programmes in the most effective way.
Disarmament and demobilization programmes
60. During the period, OIOS conducted audits of disarmament and demobilization
programmes in UNMIL and MONUC. In UNMIL (AP2005/626/07), the audit
revealed weaknesses in internal controls, such as inadequate control over
programme assets and payments of transitional safety allowances, and in monitoring
and evaluation systems. UNMIL has agreed to implement the recommended
measures to strengthen identified weaknesses. In MONUC (AP2005/620/08), OIOS
identified additional weaknesses, including the following: (a) the ad hoc manner in
which the Mission developed its plans (which had never been approved by the Head
of Mission); (b) the lack of a systematic and structured approach to coordinating
disarmament and demobilization activities with other sections and components
within the Mission; (c) the lack of plans and resources for the public information
component of the programme; and (d) the need for an evaluation of the programme
which had been in operation for more than three years. MONUC did not accept most
of the OIOS recommendations, generally asserting that existing practices were
adequate and that the OIOS proposed oversight structure for disarmament and
demobilization was not effective. OIOS has reiterated the recommendations and
continues to pursue them.
07-24903 21
-----------------------------------------------------------------------------------------
A/61/264 (Part II)
Trust funds
61. Trust funds in UNAMA (AP2005/630/08) had received contributions totalling
$35 million from various donors for implementing projects relating to emergency
relief, recovery and reconstruction in Afghanistan. By the end of June 2005, the
Mission had spent $22 million on 150 projects, of which 78 were completed and 69
were ongoing, while three projects had been terminated. The audit made
recommendations for improving the administration of the trust funds, as follows:
(a) refining the roles and responsibilities of the trust fund committee, the
programme support unit and the trust fund unit; (b) ensuring that implementing
agencies were accountable for the funds disbursed by the Mission; and
(c) streamlining the process for the release of funds to implementing agencies. The
audit also identified improper payment of allowances totalling $150,000 to staff of
the Office for the Coordination of Humanitarian Affairs. OIOS has not received
proof of recovery of payments from the concerned persons. The Mission is in the
process of implementing the OIOS recommendations.
Quick-impact projects
62. OIOS conducted audits of quick-impact projects implemented by UNMEE,
UNMIL, UNOCI and MONUC. At UNMEE (AP2005/624/03), OIOS found that
most of the recommendations made in its previous audit report of July 2002 had not
been implemented. The lack of standard operating procedures, combined with
inadequate management attention and involvement, had resulted in questionable
disbursements, delays in project implementation and lack of accountability. OIOS
continues to follow up with UNMEE on the implementation of its outstanding
recommendations.
63. In UNMIL (AP2005/626/10), there were control weaknesses that led to non-
compliance with the guidelines for quick-impact projects, particularly with regard to
the review of project proposals prior to the approval and release of funds. The
Mission needed to intensify its efforts to clear the backlog of advances paid to
implementing agencies and ensure the recovery of funds, wherever necessary. In
addition, the creation of a database showing the performance of the various
implementing agencies would enable the Mission to ensure that non-performing or
poorly performing agencies did not receive additional funding. UNMIL has initiated
the necessary steps to implement OIOS recommendations. The Department of
Peacekeeping Operations further commented that it is developing a comprehensive
policy on quick-impact projects, which will cover resource allocation, project
selection and duration and the roles of missions and other participants in managing
and implementing those projects. The policy will also consider the
recommendations of the oversight bodies relating to quick-impact projects.
Rule of law
64. An audit of the rule of law programme at MONUC (AP2005/620/12) found
that the Mission's Rule of Law Unit needed to define its role, develop a workplan
that included goals and time frames for implementation and adopt a concept of
operations that was consistent with its mandated responsibilities. Furthermore, there
was a need to develop terms of reference for ensuring coordination with other
entities involved in the programme, including procedures for defining goals,
assigning responsibility and tracking and reporting on the progress made. MONUC
22 07-24903
-----------------------------------------------------------------------------------------
A/61/264 (Part II)
has undertaken the implementation of OIOS recommendations in this regard.
According to the Department of Peacekeeping Operations a concept of operation
was developed, which was superseded by a three-year strategic plan. A workplan has
been developed consistent with the plan that identifies time frames and officers
responsible for completion of tasks.
Integrated peacekeeping training
65. In an inspection to assess the effectiveness of integrated training for military,
police and civilian personnel of peacekeeping operations (MECD-2006-001), OIOS
noted a sound and current training strategy with policies and supporting guidance.
To enhance peacekeeper training, OIOS recommended greater cooperation among
civilian, military and police components and career development planning. The
inspection further stressed the importance of the following:
� Improved coordination with the international training community at large.
� Building closer partnerships between the Department of Peacekeeping
Operations, Member States and peacekeeping training institutions.
� Formal recognition and/or accreditation of training courses and institutions.
The Department has accepted the preceding recommendations.
Military involvement in civil assistance in peacekeeping operations
66. A review of military involvement in civil assistance in peacekeeping
operations (A/60/588) found that the quality and effectiveness of military support to
civil assistance varied greatly and in some instances was counterproductive. The
report underscored the need for coherent planning, strategy development and
thorough consultation and coordination with the humanitarian organizations and
agencies in theatres of operation to avoid duplication and/or conflicting activities.
The report also noted the need for adequate resources, including qualified personnel,
to make military involvement more effective and efficient. The Department of
Peacekeeping Operations accepted and is in the process of implementing OIOS
recommendations.
Information management in peacekeeping operations
67. In a review of the effectiveness of information management in peacekeeping
operations (A/60/596), OIOS underscored the need for comprehensive and effective
information management for informed decision-making and for ensuring security
and success in peacekeeping operations. The review noted that the assets for
effective information management required focused configuration and that more
coordination was required between the peacekeeping force and civilian elements in
public information and information security. A formal institutional mechanism
should be set up for passing information from Member States to peacekeeping
operations, including inter-mission information sharing, and a new technology
should be introduced for information collection and analysis. The Department of
Peacekeeping Operations is in the process of implementing OIOS recommendations.
07-24903 23
-----------------------------------------------------------------------------------------
A/61/264 (Part II)
Review of the results-based budgeting framework
68. At the request of the Controller, OIOS is currently undertaking a review aimed
at assessing the effectiveness and efficiency of the results-based budgeting
framework for the achievement of results in peacekeeping operations. The review
stems from the Department of Peacekeeping Operations' application of the United
Nations approach of managing processes and resources for results as the basis of
assessing performance, establishing a framework with clear objectives linked with a
set of activities (outputs) and performance indicators with which it assesses
programme performance at the end of each year. The review aims to assess the
extent to which the results-based budgeting framework is effective and efficient in
measuring the achievement of results and will cover all phases of the framework as
applied to peacekeeping operations.
III. Management consulting activities
Benchmarking organizational integration and process improvements
69. At the request of the Department of Peacekeeping Operations, the internal
Management Consulting Service of the Monitoring, Evaluation and Consulting
Division, OIOS, prepared a comprehensive benchmarking study on organizational
integration. Showing that integration is not achieved through structural measures
alone, the study highlighted the need to focus on people, processes and systems in
order to realize performance improvement. Effecting organizational change requires
dedicated change management support, and improving business processes is the key
organizational enabler to enhance performance. Lean Six Sigma is the current
industry standard for process improvement designed to reduce waste and enhance
output quality. The Management Consulting Section organized a Lean Six Sigma
executive overview workshop for the Department and related entities, and
conducted a demonstration project to test Lean Six Sigma in the peacekeeping
environment. The project resulted in a significant reduction of process lead time,
and further support for process improvement is in preparation.
24 07-24903
-----------------------------------------------------------------------------------------
A/61/264 (Part II)
Annex
Review of methodology for the allocation of resident
auditors to peacekeeping missions
1. In recent years there has been a major increase in the number of missions
where resident auditors are deployed, growing from 3 missions in 1998 to 11
currently. Mission budgets have also increased to the point where they are the major
expenditure of the Organization. The increasing number of missions has resulted in
a corresponding increase in the number of resident auditors deployed to those
missions to provide adequate oversight coverage. The General Assembly, by its
resolution 60/268, requested that the Office of Internal Oversight Services undertake
the task of refining its methodology for allocating resident auditors to peacekeeping
missions, taking into account the risk and complexity of the operations of individual
peacekeeping missions, and to report thereon to the Assembly.
2. The present formula for allocating resident auditors to peacekeeping and
special political missions was proposed in the Secretary-General's report on the
experiences gained from the use of resident auditors at peacekeeping missions
(A/55/735) and endorsed by the Advisory Committee on Administrative and
Budgetary Questions in its report on the financing of the United Nations Observer
Mission in Sierra Leone (UNOMSIL) and the United Nations Mission in Sierra
Leone (UNAMSIL) (A/54/647). Under this formula, OIOS can request the
establishment or addition of a resident auditor post at the P-3 or P-4 level in
peacekeeping missions for each $100 million of annual budgeted expenditure, as
well as the assignment of an auditing assistant at the GS-6 or GS-7 level at those
missions with annual budgets exceeding $200 million. It has also been the practice
within the formula endorsed by the Committee that for large missions, the chief
resident auditor is appointed at the P-5 level. Currently, there are a total of eight
OIOS resident audit offices headed by a chief resident auditor at the P-5 level.a
A. Experience in applying the formula for the allocation of resident
auditors
3. The Office of Internal Oversight Services has reviewed its experience in
applying the formula in the context of the risk and complexity of the individual
peacekeeping missions. The formula has provided simplicity in the guidance for
allocating resident audit resources to missions, and in practice it has enabled the
resident auditors to cover most high-risk areas at peacekeeping and special political
missions. OIOS has used the formula together with detailed risk assessments
conducted annually at each peacekeeping mission, as described in the section below,
to determine its continuing requirements for resident auditors. The current
deployment of resident auditors based on applying the formula is shown in the table.
In addition, resident audit offices will be added at the United Nations Integrated
Mission in Timor-Leste (UNMIT) and UNIFIL in 2007.
a
In MINUSTAH, MONUC, ONUB, UNMIK, UNMIL, UNMIS, UNOCI and the Middle East audit
office.
07-24903 25
-----------------------------------------------------------------------------------------
A/61/264 (Part II)
Table
Resident auditor deployment in field missions
(as of 30 June 2006)
Mission Professional staff General Service staff Local staff Total
MONUC 6 2 1 9
UNMEE 1 1 2
ONUB 3 1 4
UNMIL 6 1 1 8
UNAMA 1 2 3
UNAMI 1 1 1 3
UNOCI 3 1 1 5
UNMIK 3 1 4
Middle East 2 1 3
UNMIS 8 1 1 10
MINUSTAH 3 1 1 5
Total 37 9 10 56
4. A recent study by the Joint Inspection Unit of oversight lacunae in the United
Nations system (JIU/REP/2006/2) reported, inter alia, that for 19 United Nations
entities included in the study, the annual resources overseen per auditor ranged from
$28 million to $272 million, as compared with a suggested range of from $60 to
$110 million per auditor. OIOS notes that the present formula for allocating resident
auditors is within the upper range of budgeted expenditures per auditor as proposed
by the Unit. OIOS also believes that further refinement of the formula would not be
practical, as the modalities already exist for adjusting the formula for risk and
complexity considerations at individual peacekeeping missions.
Risk assessment approach for audit planning
5. In principle, OIOS deploys the resident auditors in line with the formula, but
may from time to time request an adjustment of the formula where there are
significant high-risk activities and mission complexities. For example, when the
mandate of a mission encompasses large and complex substantive activities or a
large trust fund is managed by a mission, it may be appropriate to deploy one or
more additional resident auditors. Conversely, when there are factors in a mission
that represent a lower-risk environment, OIOS may request fewer resident auditors
than would be called for by the formula.
6. In accordance with the International Standards for the Professional Practice of
Internal Auditing (Institute of Internal Auditors) that OIOS follows, audit plans
should be based on assessment of risks. OIOS has adopted a common risk-
assessment methodology in the audit planning process. The methodology draws on
leading practices from international accounting firms and other methodologies to
ensure that risks identified can be assessed consistently between and within
organizations. Key elements of the methodology include identifying strategic and
operational risks (the threat that an event or action will adversely affect the United
26 07-24903
-----------------------------------------------------------------------------------------
A/61/264 (Part II)
Nations ability to achieve its organizational objectives and execute its strategies
successfully); the Office of Internal Oversight Services understanding of the
organization's objectives, strategies, processes, risks and controls; an evaluation of
the controls already in place; and the professional judgement of the auditors
concerned.
7. The risk assessment determines, for each auditable activity: (a) the likelihood
or probability that an event or risk could occur without considering the effect of risk
mitigation actions and the strength of internal control; (b) the impact or the
exposure to the entity from a reputation, financial or mandate perspective should the
event or risk occur; and (c) the residual strategic and operational risk, that is, the
risk remaining after considering the mitigating influence of the control environment
and risk-management techniques. A high residual business risk indicates that the
identified risk usually has a high likelihood of having a significantly adverse impact
on the United Nations ability to attain its goals. A low residual strategic and
operational risk that is the result of a large shift in probability or impact or both
indicates that management has a high degree of reliance on controls or risk-
management techniques.
8. On the basis of the risks identified and rated in the risk assessment exercise,
including the risk of fraud and misappropriation, threats to the physical security of
United Nations staff and facilities, and the like, the audit plan is prepared, allocating
resident audit resources to high risks first, then to medium risks for the second year
of the plan and continuing thereafter until all significant risks are covered.
9. The risk-assessment process has been designed to be dynamic, and resident
auditors update their plans on an ongoing basis to reflect the changing risk
environment of the missions. Mission management has also been very receptive to
the risk-assessment methodology. For example, in UNOCI and UNMIL, the risk
assessment was widely distributed to all section chiefs and has become a
cornerstone of their internal control assessment and risk management.
B. Achievements resulting from the deployment of resident auditors
Adding value to the Organization
10. Recently, peacekeeping mission budgets have increased significantly, with a
total budget for the 2005/06 financial year of approximately $5 billion. Resident
auditors are responsible for providing internal audit for most of those expenditures,
and there have been significant changes in the resident audit function. While
resident auditors previously had a relatively low profile, OIOS has sought to
increase both their visibility and value, which has been achieved in a number of
ways, as explained below.
11. Firstly, the resident auditors' profile has increased significantly through their
participation in the senior management groups of most large missions. In most
missions, the Chief Resident Auditor is now considered a valuable resource for the
head of mission and is increasingly called on by management for ad hoc reviews and
advice. This represents a major change in the culture of missions. For example, in
ONUB, the Chief Resident Auditor played a vital role in assisting senior
management of the Mission with the implementation of a strategic management
process. Similarly, in UNMIL, the Chief Resident Auditor assisted mission
07-24903 27
-----------------------------------------------------------------------------------------
A/61/264 (Part II)
management with the implementation of a risk-management programme. It should
be emphasized, however, that such activities are not carried out at the expense of the
independence of the resident auditors, who are part of OIOS.
12. Another benefit of the resident auditor network is that it provides a structure of
auditors at missions. That structure is available to conduct horizontal audits of
systemic areas of mission operations, such as discipline, security, rations and fuel
management, and also serves as a pool of talent that can be called upon at times
when there is a surge requirement, such as the comprehensive management audit of
the Department of Peacekeeping Operations requested by the General Assembly
(A/60/717).
More effective use of peacekeeping audit staff at United Nations Headquarters
13. Prior to the development of the formula for deploying resident auditors to
missions, teams from United Nations Headquarters were sent to audit missions with
no resident auditors and to supplement coverage at missions where very few
resident auditors were assigned. Now, auditors at Headquarters are in a better
position to take responsibility for audits of the activities of the Department of
Peacekeeping Operations at Headquarters.
14. As a result, it is now possible to increase audit coverage of the Department and
other entities at Headquarters involved in peacekeeping operations, such as the
Office of Human Resources Management and the Procurement Service. In the view
of the Office of Internal Oversight Services, that coverage is vitally important since
many of the high-risk areas in field operations stem from the policies and practices
at Headquarters. For example, OIOS coverage has recently included a follow-up
review of the use of letters of assist, which are used to procure specialized goods
and services from Governments, and an audit of the Department's policies and
procedures for recruiting international civilian staff for field missions (A/59/152). In
particular, OIOS views procurement activities at Headquarters, such as systems
contracts, as being high-risk areas worthy of additional audit coverage.
Audit recommendations and their financial implications
15. The figure shows the general increase in the number of audit recommendations
issued by resident auditors over the last five years. In the view of the OIOS, the
quality and impact of the audit recommendations have also increased.
28 07-24903
-----------------------------------------------------------------------------------------
A/61/264 (Part II)
Figure
Audit recommendations issued by resident auditors, 2001-2005
2005 734
2004 562
2003 289
2002 334
2001 258
0 100 200 300 400 500 600 700 800
16. The financial impact of recommendations issued by resident auditors and
implemented during the period also increased, from $361,000 in 2001 to
$22.8 million in 2005. The recommendations related to recoveries, expenditure
reductions, additional income, budget reductions and loss or waste of resources.
17. The recommendations have also been instrumental in improving the
effectiveness of peacekeeping operations. For example, the global audit of field
security management (A/59/702) made a number of recommendations aimed at
improving the security of the Organization's personnel in the areas of security
structures, both at Headquarters and in the field; security plans and policies and
their implementation; coordination with the host Government and the external
military force and between United Nations agencies; and physical security. OIOS
plans to conduct a horizontal follow-up audit of security in 2007 to determine the
status and impact of those important recommendations.
C. Conclusions
18. The Office of Internal Oversight Services believes that the present formula for
allocating resident auditors has been an effective mechanism for determining the
auditing requirements of peacekeeping and special political missions, and that
together with the Office of Internal Oversight Services annual in-depth risk
assessments, it serves as a benchmark for the cost, risk and complexity of individual
peacekeeping and special political missions. OIOS proposes therefore to continue to
use the formula as guidance in allocating resources. The primary determinants of
resource levels for the Office will be as proposed in the report on proposals for
strengthening OIOS.b However, OIOS will take into account the risk profile of the
individual missions when determining the number and level of resident auditors
required at each mission. That may result in an increase or decrease in the resident
auditor resources requested in future OIOS budget submissions for the support
account.
b
A/60/901.
07-24903 29
-----------------------------------------------------------------------------------------